Cascade: No. 59, Fall 2005

Community Bank Takes Lead in Downtown Revitalization Project

By Keith L. Rolland, Community Development Advisor

In 1990, leaders of Orrstown Bank, a community bank in Shippensburg, Pennsylvania, and other businesses decided something had to be done with two vacant buildings near the bank’s headquarters on the town’s main street.

Following demolition of the properties in 1994, Orrstown Bank was the lead lender in a $4 million hotel construction project, which involved public and private financing and enjoyed widespread community support. The 57-bed Shippen Place Hotel and restaurant that opened in 1997 have provided a downtown anchor and helped revitalize downtown Shippensburg.

A private for-profit corporation was formed to build and manage the hotel, but the business struggled in its early years. It is now owned and overseen by the Main Street Non-Profit Redevelopment Corporation. Kenneth R. Shoemaker, president and CEO of Orrstown Bank, was the founder of the nonprofit corporation and is its president.

Shoemaker said that Orrstown is a community bank and the bank’s leadership in the project “was the right thing to do.”

James McMullen, senior managing director of the Shippen Place Hotel, said that visitors traveling to and from major area businesses or Shippensburg University often stay at the hotel. He said it is a challenge to operate small-town hotels, especially if they are not located near major highways. Occupancy at the Shippen Place Hotel averaged approximately 58 percent last year, enabling the hotel to pay for all expenses and capital improvements, he said.

In its primary banking activity, Orrstown Bank is an active residential mortgage lender in the Shippensburg area and also makes business loans, primarily to businesses with revenues of $1 million or less.

The bank participates in the Federal Home Loan Bank of Pittsburgh’s Affordable Housing Program (AHP) and administers AHP funds for six projects. In addition, an Orrstown Bank investment enabled a library in Mechanicsburg, Pennsylvania, to be renovated as apartments for low-income, mentally disabled residents. The bank works closely with the Housing and Redevelopment Authority of Cumberland County and the Franklin County Area Development Corporation on economic development and housing developments.

Orrstown Bank’s products include a basic checking account with no minimum balance requirements, no monthly service fees, and unlimited check writing. Also, about half of the bank’s officers are on the boards of community reinvestment-related nonprofits.

The bank, which opened in 1919 in Orrstown, Pennsylvania, moved its headquarters in 2002 to Shippensburg (population 5,586) in Cumberland County, southwest of Harrisburg. Shippensburg was settled in 1730 by Scotch-Irish farmers in an area still occupied by native Americans and further populated after the Revolutionary War by German settlers.